 Any questions? I would like to address a question and a comment for David Hauden. I really loved your presentation because I'm also very interested in shadow economics. And I would like to ask you a question whether you incorporated in your calculations the fact that Eurostat also incorporates in GDP calculations officially non-observed economy. Because I have a short story about Lithuania, I was interested how they do that in Lithuania. And I went to the official statistics department and I asked this question and they say, yes, Eurostat forces us to incorporate in GDP calculations officially not observed economy. I tried to ask them about the methodology. They were really very vague about it. They couldn't explain me anything about it. And the fact is that they release the exact number only two years when nobody cares about it already. And after that I wrote an article that shadow economy calculations is in shadow or something like that. And I also think that shadow economy calculation in GDP is one way that the government can also manipulate official statistics. So could you comment please on that? Yeah, definitely. Eurostat, when you actually look at the Eurostat databases they've got many different series of statistics. The one that I relied on was the harmonized GDP calculation for the Eurozone. And in the harmonized figures they don't include this figure. But the funny thing is when you compare the series that is supposed to include their estimation of the shadow economy with this one that I use, the harmonized one, there's really not much of a difference. So they do, they are trying to incorporate it on some series. But I think they've got estimation problems. Any other questions? Professor Kent or I greatly enjoyed your lecture. And I'll call it a lecture, not a speech, because it was a lecture. I was particularly struck by your explanation of how novels are usually written. When I was younger I was often rather intimidated by the thought that other novelists had clearly thought out everything in their books before switching on their computer or setting pen to paper. And that the writing process was largely a process of faithfully translating the content to their mind onto paper. Whereas my own experience has been that writing is a fundamentally chaotic process. And quite often you have no idea what you're going to write when you sit down. And when you finish writing you are surprised by what you've done. And often annoyed because it means you then have to go back and rewrite what you've already written. Indeed, if I could work a commercial plug into my question. This particular masterpiece, I was halfway through it before I realized what the plot was. And the reason I didn't know what the plot was was because I didn't know one of the characters sufficiently well. It's only when I really thought about this character that a light came on in my mind and I was able to finish it. And I've spoken to many other writers and my experience is by no means singular. Indeed, I'm wondering how many writers whose works are in the formal sense perfect are just as chaotic and disorderly as I am, but are simply better able at tidying up the end results? I think you're right. And one of the things I discovered as I check more and more cases is writing as chaos. That's why it's a form of spontaneous order. And it's actually very rare to find authors who truly plan things out fully ahead of time. And it's one of our great myths. And again, I use the example of music, but you see it again in Amadeus. Mozart has it all in his head and all he has to do is write it down on paper. And the implication is that the writing it down doesn't contribute to the work. And the famous thing about Mozart's clean manuscripts, I gather scholars have been checking the manuscripts more and there's lots of corrections. And famously Beethoven's manuscripts are almost indecipherable because of the amount of corrections. So indeed, I would say that artistic creation is a process and it's better for being a process. Percy Shelley has an incredible claim in his defensive poetry. When composition begins, inspiration is already on the decline. I think that's precisely wrong. That is exactly the idea that you had this perfect vision and the problem is you had to take some time to work it down. I was talking to someone about courage in the break and the famous example there is Kublai Khan that he had this he had the poem in his head and then someone interrupted him when he was writing it down. And so it's not as good as it could have been. But the more I look at it in one way or another, the process actually improves the work of art. As it does anywhere in the economy, things are not just done all at once and if you're not willing to correct yourself, you're probably missing something. Any other questions? I have another question for Professor Cantor as well which is that it could be that the state on purpose insulates artists from the commanding consumers to foster a style of writing and composition that will encourage them to think along the lines of central planning and how easy it is and how great it is to propagate that attitude in the population. But my question is, is that really true? And supposing we have a private law society and there's no such thing as government funding of the arts at all, would we see any kind of benefit in terms of a whole bunch of works of art now being subject to the whims of the market and therefore devoid of a tolerance or a approval of central planning? Well, as I said, there is this problem that for many artists the process of artistic creation puts them in a frame of mind that makes them think everything should be directed and again, I try to understand why artists have been so anti-capitalist. But to go back to your initial statement, I wouldn't give the people involved in government support of art enough credit to think they might have thought through what you said. Nevertheless, it clearly is an example of creating another dependent clientele in the population and there are an awful lot of artists today in all walks of life who think in terms of government grants. What that means now is political correctness. If you want to get a government grant, you need to be politically correct in all sorts of ways. You can almost check the boxes. And in that sense, I think government support of art does encourage and reward certain attitudes and that's not a good idea. And yet, I believe we should have no government support of the arts. But it's interesting. I think that aristocratic patronage of the arts was great and in fact is tied in with many of the greatest works of art produced because aristocrats had taste and made individual decisions. That's why I want to see what kills contemporary government support of the arts is bureaucracy. I've sat on the National Council on the Humanities of the United States which supports humanity's scholarship, now works of art, but I could see the process there that it was deeply irrational because it was bureaucratic. And for example, there was this impulse to equalize grants among the 50 states as if talent is evenly distributed among the 50 states in the United States, shielding on the grounds of population. That isn't true. So I think modern support of the arts is bureaucratic and the only truly irrational form support of arts, the Catholic Church did a great job supporting arts in the Renaissance and the Baroque period, all these aristocrats and monarchs did. And the one aspect of it that is truly pernicious is it is based on the premise that commercial art is necessarily corrupt and that we have to shield artists from the pressure of the market. Now again, I love Schoenberg and Bartok and Samuel Beckett and James Joyce and many modernist artists whose obscurity was justified by a genuine vision. But the result of having art now sponsored by universities, foundations and government grant agencies is any jerk can call something a work of art and if he gets a government grant he can produce it with no accountability whatsoever. And in fact, these artists I mentioned, I mean they struggle to prove themselves and in that sense you could see they really did have talent, they are great artists. But now we've got a world of government subsidized mediocrity and art, it's exactly what you would expect from government subsidies. This is for Paul. I saw the title of your presentation using literature to teach economics. I was particularly drawn to the kind of literature that I think used to be much better in helping children learn both about the world in a social setting and also in an economic setting. I'm reminded of Bruno Bettelheim's classic work on the uses of enchantment that were designed to help children see the contrast between pure white good, pure black evil so to speak. Not with the sense of trying to present these conditions as the way the world is but as a way of allowing the children to discriminate on the basis of some standards. That also carried over into such economic based literature as what I think is the most powerful piece of children's literature for teaching economics and that's the story of the Little Red Hen which has been butchered, slaughtered, turned into everything, the welfare state character of all of the attributes of market activities swept away. I think of this in terms of the importance of helping these attitudes develop within children. I think maybe the first two or three years of their lives are the most important years. By the time they grow up and go to college and so forth they've been pretty well imbued with a lot of other socialist doctrine. I guess I'm asking how your presentation or what you're thinking might be in regard to providing for a healthier form of children's literature. Well I have to confess I don't know too much about children's literature but I see what you're saying and I agree with it that traditional children's stories taught a lot of genuine virtues like saving and the virtue of hard work and so on and that really has been lost in the contemporary religious stories in schools. I'd like to see a return to that. Now I don't have as good taste as you do so my taste runs to cartoons and I write about The Simpsons in South Park. But there too it's very interesting to see how those stories can illustrate some real economic truths. I write about South Park in my new book The Invisible Hand in Popular Culture University of Kentucky Press but the South Park teaches incredible libertarian lessons. It attacks political correctness. It defends corporations. It makes fun of Hollywood celebrities who pursue environmental causes and so on. So I confess to knowing more about that than children's literature. But I do, it's very important the stories that our children learn and those stories do embody a set of values and very often an understanding of economic life and they're getting a very wrong view of the world in many of the stories they're now showed. Again so many of the stories that are now taught to children are there to teach them toleration and political correctness and in some ways contribute to the dependency of the whole population when the children are taught these lessons. So it's not something we should ignore but my route is to try to get to the children at the lowest possible level where I live. Hi, my question is also for Dr. Paul Cantor. Because when you cited the example from the English speaking world, particularly Dickens, it also reminds me one of the, considered one of the greatest Chinese novelists in Hong Kong. In the 60s, around the 60s, he found his own newspaper and to push the sales, he write his own novel every day in a column. So it must be under some pressure and feedback from the reader and now he is considered to be one of the greatest novelists in modern Chinese history. So what I'm trying to ask is that have you ever come across, actually what you observe is creation without essentially planning that kind of manner. Is it a cross-culture thing? Well as far as I can tell it is but I do not know Chinese literature and I do not know Chinese but you can observe it in other cultures and in places that you do not expect it, there is a, I do not know if I want to get too deeply into the question of the authorship of the Illy and the Odyssey but there is a great, as some of you may know there is a great question whether there was a Homer and whether one individual human being composed these two poems and in fact there is a very interesting theory developed by a professor at Harvard named Gregory Naj that shows how the Illy and the Odyssey came into existence over time in a process of bards who were singing portions of the poem around the Greek-speaking world and how they came together at festivals and in effect the poems evolved out of the cooperation among different poets and I found that quite striking so yes as far as I can tell these principles there is nothing specific to one culture that would dictate this is how this process would only take place say within Europe you see it and again the, when you bring up Homer because when you study the great epic poems from around the world whether it's in Sanskrit or Sumerian they all seem now to their products of oral traditions and therefore of a process and not a single act of creation I think the reason why we're asking you all the questions is because we've maybe thought about what you're saying a little bit less than the other topics but my question is basically I've always found it hard to apply things like objective truths and things from economics to things like the arts as you've explained and we talked about you know me prefering Kola or do you prefering Shakespeare I prefer maybe Chopin to Mozart maybe you're the opposite to what extent can you apply an objective standard in that view in your opinion well you know that's an entirely separate question from what I was talking about I never said anything about how our economics could explain whether work of art is good or not and I don't think it can I think I believe there are aesthetic criteria and that we can argue about the quality of the work what complicates it is sometimes we're all arguing about formal properties sometimes we're arguing about content and that's one reason there are so many disputes and I would say those arguments should take place within the aesthetic realm in the sense that you're really asking questions that have to do with the specific to the art so for example I would never say that a novel that supports capitalism is necessarily good and a novel that supports socialism is necessarily bad though I might have some inclinations in that direction so nothing in what I said had to do with the issue of economics somehow now providing us with objective criteria for judging works of art what I was saying is that economics does help us understand why in fact great works of art can be produced in commercial settings contrary to what so many people have claimed I'm getting my criteria of greatness independent of the issue of economics but I want to say given the fact that we judge Shakespeare to be great or Dickens to be great or Coleridge to be great is there some way in which we can see that their achievement was not contrary to the commercial setting of their work I'm always intrigued I got a quote out of a Chicago newspaper from Janet McTeer who's a fairly well-known British actress and she was complaining she was saying why she'd never make a Hollywood movie and why she hated commercial theater and she says with no sense of irony Shakespeare had to write for a commercial theater he never would have produced the plays he did I mean what ignorance successful commercial dramatist of his day the only one to get a percentage of the gross on his plays he ended up in effect a millionaire of what he made on his plays so anyway that's all I'm claiming the the issue of the objectivity of aesthetic criteria they aren't I mean I would say I don't think they're objective I still think one can have a rational discussion I might possibly be able to persuade you that Shakespeare is greater than courage by for example citing Coleridge's opinion I'm the same subject I did want to ask Dr. Cantor about censorship of the arts but I won't because somebody else needs to answer a question so could I ask Thorsten about his optimism of a world fear currency not coming into being as people revolt and look at the current trend on tax tax havens the G20 initiatives where on many things you'd think the G20 couldn't agree on anything and countries used to compete on tax much more than it looks like they're going to in the future so you're already beginning to see on the tax front money laundering laws etc etc or globally supported functions in which governments are teaming up and there doesn't seem to be any revolt against any of these actions anywhere so I'm just asking you where you get your optimism from that it won't happen well thanks very much for finding this this optimistic shade in my talk see you know what I tried to do was to come up with a pure theoretical delineation based on praxeology and your question really refers to a prediction into the future which is actually to some extent beyond what theory can provide let me maybe reiterate what I tried to say clearly the starting point of my talk was the state the origin and nature of the state and from that I developed the conclusion that nation states start cooperating in order to bring about closer monetary cooperation and this process would then lead towards single fiat currency system and I wouldn't deny that such a development is underway and you gave some further examples where governments increasingly cooperate be it tax issues, be it taxations regulation and the point I tried to make is of course this cooperation might continue for quite some time but I would doubt that the ultimate end is achievable namely to have a centralized central bank issuing a single world fiat currency and the point I made was the initiative to set up a fiat money system might be successful for quite some time just driven by small group interests but sooner or later I would assume that the need for world government will appear on the horizon and the point I made then was to say if democratic world government is envisioned then it would run into insurmountable problems and my point was you would have to impose a democratic rule over an ethnoculturally heterogeneous, most heterogeneous territory so at some point I would assume and of course this goes a bit beyond the theoretical thinking it's going to break down at some point the whole plan has to be abandoned and this is well and again I appreciate that you say this is optimistic if I may add I think there is a difference between the creation of one world central bank and tax harmonization and the difference is that in case of tax harmonization various states they are not giving up their powers they are merely harmonizing what is already happening whereas in the case of creation of one world central bank some pretty big amount of power would be given away but in the case of European central bank you can see that so you can envision how many problems you would see in the case of one world central bank my question goes to Thorsten Pallet as well you said that central world government is going to break down at some point I wonder if there is any point before breaking down all the world to stop that development because as we have seen with the euro it is very well possible to create the euro with a dramatically democratic regime and it has worked for certain years now and let's see how long it will continue to work so the question is you can't rely on the cultural and ethnical diversity to prevent world government I see I clearly see that you are getting increasingly haunted by this idea of world government being upon you I also referred in my talk to the euro project and typically it is marketed as a kind of crowning step in the political and economic integration and if you apply a practical analysis I just try to outline it then you would actually see a different story behind this whole project it is clearly an attempt to reduce the competition among national fiat currencies substituting national governments for single centralized centralized currency managed by a centralized system as you already pointed out I mean the problems become increasingly clear we know that fiat currencies cause a lot of damage economic damage for instance the current financial and economic crisis is at its core a crisis of the fiat currency system now the damage has been done and in Europe the nation states keep struggling who is going to shoulder the costs so far they have applied some tricks like the European stability mechanism to prevent the public at large from seeing the costs so you could argue even the political proponents of the single currency project run into quite some problems to hide the negative effects of the single currency I would think these problems keep building up maybe we are just at the very beginning of this whole crisis and so I would say it's premature from let's say the experiment of the last 10 years to conclude that because of the last 10 years it is likely that this political initiative will be successful in moving forwards maybe just a comment also on this to some extent maybe we don't need the premise that we need the world government to get monetary unification as a matter of fact that's what we have in the US there is a single dollar but still the taxing authority at state level is distributed in the European Union we have the same single monetary policy taxation is kept as a national priority so maybe we can also imagine more subtle ways of monetary unification within this praxeological approach which I fully agree that there will be a single currency where governments will give up this monopoly of monetary creation so to speak but other functions of government will be kept that might quite well I believe also be one outcome which would reconcile these concerns if I may also I don't know how to phrase this as a question to Matt I fully agree with your comparison between Keynes and Friedman but wouldn't you go a little bit further and say that actually Friedman is much worse than Keynes in a sense because he never published a full treaty on money he has contributed he is the monetary theorist of the 20th century he contributed to this complete disintegration of monetary theory where macroeconomics has become only a matter of specific tools gaps which particular econometric technique to apply and when you combine this with his free market defense on other areas the picture which he helps to convey of a free market view on money is actually a complete disaster what would you be your take on this I would say that that's the spirit of his times the way the science developed and maybe it's because he was more in his methodology he was more positivistic than Keynes but using that standard we should even say that Marx is better than Friedman right because at least he wrote the treatise right with a big one free volumes but I would say it's just the spirit of his times the way the science developed do we have any treatise after 1945 written by any good very good mainstream economist we have and that's the textbook even right so it's you don't have many footnotes and so on I'm patinking maybe right I wouldn't come to the rescue of Friedman but maybe there's one consideration which we should take into account when Friedman came up with his monetary rule that was as you say in a period where inflation was high and the idea was how do we get inflation how do we get a lower rate of inflation and Friedman's idea was okay we keep the money production monopoly with the central bank but impose the central bank under a strict constitutional rule the central bank has no scope for discretionary action and lobbying groups cannot interfere with monetary policymaking that was his idea and in fact Friedman said he tried to mimic a kind of gold standard by this by this monetary framework because at that time he knew in 1950s 1960s he wouldn't get any sympathy for returning the world monetary system onto a gold standard and so Hayek at that time was for free competition of currencies he just said you know let the market decide what kind of currency people would like to have and the response of Friedman was in this case Friedman was actually more state skeptical than Hayek Friedman said once we allow for currency competition sooner or later the government will step in and issue its own money and therefore we are going to have a better situation to have a clear cut framework within governmental power over the money production is actually put to a limit but of course Friedman was in complete denial I think that was the biggest problem of the Austrian school of economics monetary theory because Friedman suggested that under his monetary framework money should get created through bank circulation credit and that gives of course all these boom and bust cycle speculative bubbles I think there is the really big mistake so to speak Friedman did so we have 10 more minutes and 4 people on the list just to give you orientation talking about the possibility of a fiat currency a one world fiat currency and that it may disintegrate for whatever reason or eventually occur and then eventually collapse given that no fiat currency can exist forever I'd like to know each of your thoughts perhaps given the small time frame maybe just a quick response but regarding whether we'll return to some sort of commodity money and if so which it will be if you see silver and gold coins in the future or something else you know one lesson I learned during the international financial economic crisis is that the system is much more robust than most people think it is and the reason is there's so many people depending on fiat currencies you know we have so many people receiving government transfer payments receiving their job opportunities from the state people have invested a decent amount of their lifetime savings in fiat denominated bonds issued by banks and governments and so we have actually a strong incentive among I would say the majority of the people in most countries to keep the system going and the only the only way to bring down to its knees a fiat currency system is a collapse of the money demand so people would no longer wish to hold the money newly created by the center and we are far from such a situation I assume so I would say it's going to continue for a while but the underlying economic damage of course increases that's for sure and in terms of timing I have no idea I have no idea but I would assume that it makes a tremendous sense to invest your lifetime savings wisely you know don't put your money in the bank don't buy bank bonds because sooner or later for instance in your area some of these bonds will be cancelled out then they are gone some governments bonds will meet the same fate and there will be money printing there will be taxation and the best thing you can do is really to go under the radar screen of the government I think this is maybe the best recommendation I can give in terms of structuring your lifetime savings I think there are two ways oh sorry I'll pass well I'm the socialist on the panel so I was told so keep that in mind with this answer but I don't actually think we're facing monetary disintegration because despite what you might think politicians and central bankers aren't exactly idiots and they know a good deal when they have it and they're not going to let this system go to waste in fact there's relatively few historical instances of hyperinflation wasting away a currency when you think about it and I'm really not too worried or I assign it fairly low probability that central bankers today are going to completely destroy their currencies and then also give up control of the currencies that they have to the free market because they realize the the power that's bestowed in them and the profits that are bestowed in them rather by controlling them I would agree with this but we have also to keep in mind that what we are observing here due to mass business cycles is a general impoverishment of society and when you couple this with the welfare states here in the entire classes of the population which are living on government money, off government money it is quite clear that at some point we cannot fully avoid hyperinflation as a natural result not as created by governments and that is probably the course that will happen in the future indeed we don't have monetary disintegration now we have actually precisely monetary unification as Thorsten pointed out Latvia has joined the euro so against all expectations that the euro zone will be divided it is actually expanding there are plans for another monetary unions here and there in the world currently going on so we will go on that way I believe there will be more and more to your economics explain decreasing productivity higher demands from population on welfare and then this can only be provided through future inflation okay we have when I was a young man a boy actually the war came down, the Berlin war came down all of a sudden November 1989 and I was brought up in school and people were saying it may take decades for the war to come down and as a young boy I believed what I heard and it took me by surprise I was in Portugal at that time seeing in a little coffee shop TV showing people streaming across the border with people hammering down the wall and all I'm saying is socialist projects won't be successful and our monetary system is a socialist planned economic system and so you should always reckon with a certain surprise but there was an external world you need an external world in case of fiat money you don't have that external world so if you would have one word socialism like in Orwells then the collapse wouldn't be well would be less probable much less probable okay we have now two more minutes maybe just one more question I have a question for Professor Hauden one of the big issues among Icelanders is whether or not it would be good for the Icelandic economy to be part of the European Union so what are your thoughts well being part of the EU or being part of the Eurozone didn't save too many other countries from being in a crisis so if they think that this is going to be the panacea for their woes and that Euro inclusion would somehow keep them out from having this giant boom that they had I think that's a mistaken belief and I'm not so sure that that's on the Eurozone side of things I'm not so sure that joining the European Union and subjecting themselves to the laws and legislations of it is such a good move either because there's a lot of Iceland as a country rich in natural resources in many ways it has many opportunities to get itself out of this crisis it's done a lot of it already but subjecting yourself to the whims of the EU that has a different agenda or different uses for your resources and your wealth I don't think it's such a great great idea and I think that this is more pushed by the ideas that Iceland would join the Eurozone or the EU I think that there's motives more within the EU or the Eurozone to get that rather than your average Icelander demanding this a lot of just normal ordinary Icelanders they foolishly in my opinion believe that it would be good for the economy to join the union because it would enhance free trade so that's just what the ordinary Icelanders believe the ones that support the idea they're already in the economic union so they already have perfectly free trade with Europe that wouldn't change if they joined the EU they would just subject themselves to the laws there's no benefit in that they're mistaken if they believe this okay the very last question like Turkey in that regard very last question Mr. Schwartz okay that's it sorry time